The Art of Business: Staffing Strategies for Troubled Times

Eric J. Adams

If you employ one or more people, these are difficult times, not only because a slowdown means less revenue, but because you may have to flirt with the idea of laying off a talented employee or two — people who have become very good friends, perhaps.

But slow times can also be an opportune time to bring in fresh talent, renegotiate contracts, and reevaluate your staffing requirements, according to Kristin Knight, CEO of Creative Assets, an employment agency specializing in creative talent. “A downturn in the economy can work for you, particularly if you believe a turnaround is coming shortly.”

Even if you’re predicting doom and gloom for years to come, here are some staffing tips for these challenging times.

Avoid layoffs like the plague. A layoff seems like a simple equation — fewer employees result in lower cost — but the math isn’t so simple. There are costs associated with letting employees go. In addition to the potential cost of severance packages, you have to figure in intangible costs, such as the loss of continuity and intimacy between staff and clients

“It doesn’t help your reputation among clients and customers if your sales reps or designers are here one day and gone the next. With every walking employee goes a little bit of company knowledge,” said Knight. “So if layoffs are inevitable, consolidate back-office positions first and strive to retain customer-facing personnel.”

Now add into the equation the cost of rehiring and retraining workers, because when the recession finally ends, you’ll be saddled with these costs as well. Also remember that once the good times rolls again, there’s no guarantee you’ll be lucky enough to hire back employees with equal talent.

“Strive to hold on to your employees now, and when the economy reengages you’ll be in a prime position to take advantage of new business instead of scrambling for employees to fill key positions,” said Knight.

Renegotiate contracts. Here’s a Pandora’s Box if there ever was one: Ask employees to take a pay cut. But do so only if (a) the only alternative is a layoff; (b) everyone on your staff is in general agreement; and (c) you’re willing to include yourself in the belt tightening. Employees may be amenable at first, but no one likes their income reduced, so be forthcoming and honest and make it a temporary cut if at all possible.

Use layoffs to strengthen your staff. If you absolutely must lay off workers, use the opportunity to let go of under-performing employees — not the expensive ones. “Try to retain the best and the brightest you have, even if they are the highest salaried workers. A productive and talented employee is always of greater value than a modestly productive employee at a lower salary level,” said Knight.

Remember, though, after a round of layoffs office morale will likely take a hit. The tendency is to placate remaining workers with assurances, “but be careful not to make promises you can’t keep, as nothing is worse for morale than a broken promise,” said Knight. One way to counter lowered morale is to introduce a new round of training to show employees you’re committed and willing to invest in their careers.

Hire on a per-project basis. There are advantages to using contract talent in tough times. More importantly, you can tie employee costs directly to a project budget so that when the project ends so does the cost of the additional worker.

“Hiring on a per-project basis also allows you to try out an employee for a length of time. If the employee turns out to be talented, motivated, and a great fit for your company, you can offer him or her a full-time job. If not, than there are no strings attached, and no severance packages or unemployment payments to worry about,” said Knight.

Use this time to actively recruit. Even if you’re not in a position to hire right away, there’s no reason you can’t at least get the network engine humming. Arrange for informational interviews and begin building relationships with people you may want to hire down the road.

Current employees are a great resource of referrals but often yield only a small number of candidates. You can broaden the pool by using Internet posting boards and newspaper classifieds or by beginning a relationship with a placement agency.

“Good creative placement agencies make their living by having their ear to the ground in local markets and keeping a list of talent looking for a particular situation but not necessarily applying. These passive recruits are often the most talented of all,” said Knight.

Hire today. If you’re a true optimist and believe happy days are near again, hiring today can save you big tomorrow. “You can lower your salary offerings and hire people for thousands of dollars, if not tens of thousands of dollars, less than you’ll be able to hire them in a hot market,” said Knight.

Cash flow may be the ultimate arbiter of what you can and can’t do when it comes to staffing, but before you pull the trigger on a layoff, think strategically, remembering that staff is your greatest asset.